Pros and Cons of Saving vs. Investing

One of the most popular questions people ask is whether they should save their money or invest it. The simple answer: both. While investing your money traditionally earns more than a savings account, there are some risks and downsides.

Before you jump straight into risk-based investments, it’s essential to understand the pros and cons of both options.

What Are The Advantages Of A Savings Account?

There are several savings options available to members at Genisys. These include savings accounts, money market accounts, and certificate accounts. While each option is slightly different, they all share vital advantages.

• Less Risk. Unlike market investments, savings at a credit union only grow—there’s no risk of losing your balance.
• Easy Access (Good). You can withdraw savings quickly when you need them. Funds aren’t tied up like investments, and even certificate accounts usually allow early withdrawal (though a small penalty may apply).

What Are The Disadvantages Of A Savings Account?

• Earn Less. Savings typically offer lower returns than risk-based investments. Conservative investors may prefer the trade-off: lower growth, but little to no risk.
• Easy Access (Bad). Savings are easy to tap into, but that same convenience can tempt you to spend on things you don’t really need.

What Are The Advantages Of Investing?

• Better Returns. Market-based investments usually earn more than savings accounts, but they come with the possibility of losses. Working with a financial advisor can help manage that risk.
• Built for the Long Term. Investing is a longer-term strategy. Diversification, tax-advantaged accounts, and time in the market can help protect against inflation and economic swings.

What Are The Disadvantages Of Investing?

• Greater Risk. Higher earning potential comes with the chance of losing money. Short-term market ups and downs can be stressful, but a long-term plan can help reduce exposure.
• Less Liquid. Invested funds aren’t always instantly accessible. Withdrawals can take time, and pulling money when markets are down may lock in losses.

Can I Have A Savings Account And Investments?

Everyone wants to grow their money. Start by building your emergency fund. Once you have three to six months of living expenses saved in your savings account, switch your focus to investments.

We’re Here to Help!

When it comes to growing your money, there are many options available. Whether you’re interested in opening a savings account or speaking to a financial advisor, our team is ready to help. Please stop by any of our convenient branch locations to learn which savings and investing options are right for you.

 

© Genisys Credit Union and www.genisyscu.org, 2022. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited.  Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content.

 

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